Federal Power Act Amendments Act of 2003
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Read twice and referred to the Committee on Energy and Natural Resources.
March 26, 2003
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Introduced in Senate
March 26, 2003
Sponsor introductory remarks on measure. (CR S4442-4443)
March 26, 2003
Read twice and referred to the Committee on Energy and Natural Resources.
March 26, 2003
Floor Debate
10 membersWhat members said about S. 716 on the floor




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Floor Debate
10 membersWhat members said about S. 716 on the floor
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Mr. President, I ask unanimous consent that the text of the bills be printed in the Record.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
Mr. President, I ask unanimous consent that the text of the bill be printed in the Record.
Bill Text
Latest available legislative text
[Congressional Bills 108th Congress]
[From the U.S. Government Publishing Office]
[S. 716 Introduced in Senate (IS)]
108th CONGRESS
1st Session
S. 716
To amend the Federal Power Act to improve the electricity transmission
system of the United States.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
March 26, 2003
Ms. Landrieu introduced the following bill; which was read twice and
referred to the Committee on Energy and Natural Resources
_______________________________________________________________________
A BILL
To amend the Federal Power Act to improve the electricity transmission
system of the United States.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Federal Power Act Amendments Act of
2003''.
SEC. 2. CLARIFICATION OF FEDERAL AND STATE JURISDICTION.
(a) Section 201(a) of the Federal Power Act (16 U.S.C. 824(a)) is
amended by striking all after the word ``however'' and inserting the
following: ``shall not extend to those matters which are subject to
regulation by the States, including the retail sale of electric energy
and any component service thereof.''.
(b) Section 201(b)(1) of the Federal Power Act (16 U.S.C.
824(b)(1)) is amended by inserting in the last sentence, before the
period the following: ``, nor shall the Commission have jurisdiction
over bundled retail sales of electric energy, including the
transmission component of sales of electric energy to retail
customers''.
(c) Section 201 of the Federal Power Act (16 U.S.C. 824) is amended
by inserting a new subsection (h) as follows:
``(h) Bundled Retail Sales of Electric Energy.--The term `bundled
retail sales of electric energy' when used in this subpart means sales
of electric energy to retail customers where generation, transmission,
distribution and other services necessary to supply electric energy to
such customers are sold as a single delivered service by a single
seller.''.
SEC. 3. VOLUNTARY PARTICIPANT FUNDING.
(a) Section 205 of the Federal Power Act (16 U.S.C. 824d) is
amended by inserting after subsection (f) the following:
``(g) Transmission Expansion Costs.--
``(1) Definitions.--In this subsection:
``(A) Participant-funding.--The term `participant-
funding' means an investment in the transmission system
of any transmitting utility that--
``(i) increases the transfer capability of
the transmission system; and
``(ii) is paid for by an entity that, in
return for payment, receives the tradable
transmission rights created by the investment.
``(B) Tradable transmission right.--The term
`tradable transmission right' means the right of the
holder of such right to avoid payment of, or have
rebated, transmission congestion charges on the
transmission system of a regional transmission
organization, or the right to use a specified capacity
of such transmission system without payment of
transmission congestion charges.
``(2) Rates for transmission expansion.--Upon the request
of a Regional Transmission Organization (`RTO'), or any
transmission entity that is authorized by the Commission, the
Commission shall authorize the recovery of costs on a
participant-funding basis of transmission facilities that
increase the transfer capability of the transmission system.
``(3) Participant funded investment.--
``(A) Any RTO that is approved by the Commission,
or any transmission entity that is authorized by the
Commission, that adopts participant funding pursuant to
paragraph (2) shall monitor market conditions,
including the magnitude and frequency of transmission
congestion, requests for transmission service, and
secondary market prices for Tradable Transmission
Rights. Based on this information, the RTO shall
identify, and publicize projects for potential
participant funding that have not been otherwise
committed to by a market participant which increase the
capacity or transfer capability of the transmission
system, as well as the projected Tradable Transmission
Rights associated with those projects.
``(B) If more than one market participant is
interested in developing a project publicized in
accordance with these provisions, the RTO may auction
participation in the funding of such project to the
bidders providing the highest overall value.''.
(b) Section 3 of the Federal Power Act (16 U.S.C. 796) is amended
by adding the following definition at the end:
``(26) Regional transmission organization.--The term
`regional transmission organization' means an entity that
controls and/or operates facilities for the transmission of
electric energy in interstate commerce and is not a market
participant. The term shall encompass independent system
operators, independent system administrators, independent
transmission providers, and similar organizations.''.
SEC. 4. INTERCONNECTION.
Section 210 of the Federal Power Act (16 U.S.C. 824i) is amended to
read as follows:
``transmission interconnection authority
``Sec. 210. (a)(1) The Commission shall, by rule, establish
technical standards and procedures for the interconnection of
facilities used for the transmission of electric energy in interstate
commerce with facilities used for the generation of electric energy.
The rule shall provide criteria to ensure that an interconnection will
not unreasonably impair the reliability of the transmission system.
``(2) The rule promulgated pursuant to paragraph (1) shall provide
that the person seeking the interconnection shall--
``(A) pay the necessary and reasonable costs of the
interconnection;
``(B) pay, in accordance with section 205, the necessary
and reasonable costs to upgrade system facilities made
necessary by the interconnection and that would not have been
made absent the interconnection; and
``(C) not be entitled to transmission service credits as a
result of payments under subparagraphs (A) and (B) of this
section, except for tradable transmission rights for facilities
that are participant funded pursuant to section 205(g); and
``(D) either--
``(i) make the payments required under this section
in advance of the costs being incurred by the
transmitting utility; or
``(ii) provide and maintain in effect an
irrevocable letter of credit or other form of security
acceptable to the transmitting utility until all
payments contemplated under this section are made in
full.
``(3) The rule required by this section shall apply to all
interconnection agreements made pursuant to any tariff ever approved by
the Commission that provided that the person seeking the
interconnection pay for the necessary and reasonable costs to upgrade
system facilities made necessary by the interconnection and that would
not have been made absent the interconnection and to all cases in which
a final, nonappealable order has not been issued by the Commission or a
court.
``(4) Notwithstanding section 201(f), a transmitting utility shall
interconnect its transmission facilities with the generation facilities
of a power producer upon the application of the power producer if the
power producer complies with the requirements of the rule.
``(b) Upon the application of a power producer the Commission may,
after giving notice and an opportunity for a hearing to any entity
whose interest may be affected, and subject to the requirements of
sections 205(g) and 212, issue an order requiring--
``(1) the physical connection of facilities used for the
generation of electric energy with facilities used for the
transmission of electric energy in interstate commerce;
``(2) such action as may be necessary to make effective any
such physical connection; or
``(3) such increase in transmission capacity as may be
necessary to carry out the purposes of such order.
``(c) As used in this section, the term `power producer' means an
entity that owns or operates a facility used for the generation of
electric energy.''.
SEC. 5. ENCOURAGING TRANSMISSION INFRASTRUCTURE EXPANSION.
(a) Section 205 of the Federal Power Act (16 U.S.C. 824d) is
amended as follows:
(1) by adding ``(1)'' after ``(a)''.
(2) by adding the following at the end of subsection
(a)(1):
``(2) In setting rates for transmission services, the Commission
shall ensure that all jurisdictional uses of transmission facilities
bear an allocation of the embedded costs of the facilities, as well as
the costs of any other services that are ancillary to the transmission
of electric energy.
``(3) In addition to the charges required by paragraph (2), the
Commission shall ensure that when new facilities are required to
provide jurisdictional transmission service and would not have been
required absent such service, the requestor of such transmission
service pay for any such facilities.
``(4) The requestor of transmission service shall not be entitled
to transmission service credits as a result of payments made under
paragraphs (2) and (3), but will receive tradable transmission rights
for facilities that are participant funded pursuant to subsection (g).
``(5) The requestor of transmission service shall either--
``(A) make the payments contemplated under
subsection (3) of this section in advance of the costs
being incurred by the transmitting utility or;
``(B) provide and maintain in effect an irrevocable
letter of credit or other form of security acceptable
to the transmitting utility until all payments
contemplated under paragraph (3) are made in full.
``(6) Nothing in this section shall preclude the Commission from
authorizing rolled-in pricing of new jurisdictional transmission
facilities upon request of a Regional Transmission Organization or any
transmission entity that is authorized by the Commission, provided that
the Commission complies with otherwise applicable laws in making such a
determination.''.
(b) Part II of the Federal Power Act is amended by adding the
following after section 214:
``SEC. 215. SUSTAINABLE TRANSMISSION NETWORKS RULEMAKING.
``(a) Within 6 months of the date of enactment of this section, the
Commission shall establish, by rule, transmission pricing policies and
standards for promoting the expansion and improvement of interstate
transmission networks through incentive-based, performance-based,
participant-funded and cost of service-based rate treatments to ensure
reliability of the electric system, to support interstate wholesale
markets for electric power, and expand transmission transfer capacity
needed to sustain wholesale competition. Policies and standards
established under this section shall--
``(1) be applicable to all public utilities;
``(2) be consistent with section 205; and
``(3) shall specifically--
``(A) promote capital investment in the
economically efficient enlargement of transmission
networks to reduce congestion on transmission networks
and provide assurance that new generation and
transmission is built where it provides the lowest
overall cost to consumers;
``(B) encourage improved operation of transmission
facilities and deployment of transmission technologies
to increase capacity and efficiency of existing
networks and reduce line losses, including but not
limited to high-capacity wires (including high-temperature
superconducting cables), power electronics and information technologies
(including flexible alternating current transmission system
technologies), and high-voltage, direct current lines;
``(C) provide a return on equity that attracts
investment in new transmission facilities and
reasonably reflects the financial, operational, and
other risks taken by public utilities in restructuring
transmission assets; and
``(D) reward improved quality of transmission
service.
``(b) Limitation on Authority.--In the case of any transmission
rate approved by the Commission on or after the effective date of the
rule established under this section, the rate shall comply with--
``(1) the policies and standards adopted pursuant to this
section as necessary or appropriate to implement the
requirements of section 205(a) of this Act; and
``(2) the procedural and other requirements of this part,
including the requirement of sections 205 and 206, that all
rates, charges, terms, and conditions be just and reasonable
and not unduly discriminatory.''.
SEC. 6. REGIONAL CONSIDERATION OF COMPETITIVE WHOLESALE MARKETS.
(a) Within 3 months of enactment of this Act, the Commission shall
convene regional discussions with State and other retail regulatory
commissions for the purpose of addressing whether wholesale electric
markets in each region are working effectively to provide reliable
service to electric consumers in the region at the lowest reasonable
cost. Priority should be given to discussions in regions that do not
have, as of the date of enactment of this Act, a regional transmission
organization or organizations in place and approved by the Commission.
The regional discussions shall address the following issues:
(1) the need for an independent regional transmission
organization or organizations in the region to provide
nondiscriminatory transmission access and generation
interconnection;
(2) a process for regional planning of transmission
facilities with State and other retail regulatory commission
participation and for consideration of multistate projects;
(3) a means for ensuring that native load customers within
the region maintain their ability to use the existing
transmission system without incurring additional costs;
(4) a means to provide transparent price signals to ensure
efficient expansion of the electric system and efficiently
manage congestion;
(5) eliminating in a reasonable manner, consistent with
applicable State and Federal law, multiple transmission system
rates for transactions within the region;
(6) resolution of seams issues with neighboring regions and
interregional coordination;
(7) a means of providing information electronically to
potential users of the transmission system;
(8) implementation of a market monitor for the region with
State and other retail regulatory commission and Commission
oversight and establishment of rules and procedures that ensure
that State and other retail regulatory commissions are provided
access to market information and that provides for expedited
consideration by the Commission of any complaints concerning
exercise of market power and the operation of wholesale
markets; and
(9) a timetable to meet the objectives of this section.
(b) Within 12 months of enactment of this Act, the Commission shall
report to Congress on the progress made in addressing the issues in
subsection (a) of this section in discussions with the States.
(c) The following entities are authorized to participate in
regional transmission organizations after conducting a public process
to receive comments: the Tennessee Valley Authority, the Bonneville
Power Administration, the Southwestern Power Administration, and the
Western Power Administration. Notwithstanding any other law,
participation may include delegation of operation and control of the
transmission facilities to a regional transmission organization or
other method of participation, under terms and conditions the entity
determines necessary or appropriate, including being bound by
operational and other orders of the regional transmission organization
and by the results of arbitration with the organization or with other
participants.
(d) Nothing in this section shall affect any discussions between
the Commission and State or other retail regulatory commissions that
are ongoing prior to enactment of this Act.
SEC. 7. EFFECT ON STATE LAW.
Section 206 of the Federal Power Act (16 U.S.C. 824e) is amended by
adding at the end the following:
``(e) A transmitting utility reserving transmission capacity (or
reserving the equivalent amount of tradable transmission rights) to
meet any legal or contractual obligation to serve customers, to deliver
reserves in an emergency, or to serve retail customers at bundled rates
set by a State commission or a local regulatory authority, shall not be
considered as engaging in undue discrimination or preference under this
Act.''.
SEC. 8. OPEN ACCESS TRANSMISSION BY CERTAIN UTILITIES.
Title II of the Federal Power Act is amended by inserting after
section 211 (16 U.S.C. 824j) the following:
``SEC. 211A. OPEN ACCESS TRANSMISSION BY CERTAIN UTILITIES.
``(a) Subject to section 212(h), the Commission may, by rule or
order, require an unregulated transmitting utility to provide
transmission services--
``(1) at rates that are comparable to those that the
unregulated transmitting utility charges itself; and
``(2) on terms and conditions (not relating to rates) that
are comparable to those under which such utility provides
service to itself.
``(b) The Commission shall exempt from any rule or order under this
subsection any unregulated transmitting utility that--
``(1) sells no more than 4,000,000 megawatt hours of
electricity per year;
``(2) does not own or operate any transmission facilities
that are necessary for operating an interconnected transmission
system (or any portion thereof); or
``(3) meets other criteria the Commission determines to be
in the public interest.
``(c) The rate changing procedures applicable to public utilities
under subsections (c) and (d) of section 205 are applicable to
unregulated transmitting utilities for purposes of this section.
``(d) In exercising its authority under paragraph (1), the
Commission shall remand unregulated transmitting means an entity that
utility transmission rates to an unregulated transmitting utility for
review and revision where necessary to meet the requirements of
subsection (a).
``(e) The provision of transmission services under subsection (a)
does not preclude a request for transmission services under section
211.
``(f) The Commission may not require a State or municipality to
take action under this section that constitutes a private business use
for purposes of section 141 of the Internal Revenue Code of 1986.
``(g) The Commission may not require any transmitting utility to
make available to third parties transmission capacity necessary to
fulfill its obligation to serve its wholesale, retail, or transmission
customers under Federal, State, or local law, or under contracts in
effect on the date of enactment of this section.
``(h) For purposes of this subsection, the term `unregulated
transmitting utility' means an entity that--
``(1) owns or operates facilities used for the transmission
of electric energy in interstate commerce; and
``(2) is either an entity described in section 201(f) or a
rural electric cooperative.''.
SEC. 9. SAVINGS CLAUSE.
Nothing in this Act shall affect or modify otherwise applicable law
governing the recovery by an electric utility in retail rates of costs
incurred under any tariff, rate schedules, or agreements subject to the
Commission's jurisdiction.
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